Even As Copyright Trolls' Legal Strategy Appears To Be Failing, The Shakedowns Are Working

from the profitability... dept

We've noted that most of the judges handling the various mass infringement file sharing cases have been tossing most of the defendants, questioning the legal basis for lumping so many into a single lawsuit. And, yet, even with such failures, it turns out that the business is quite profitable (for now). Two separate articles about two of the lawyers in this game (and it is a game, rather than any sort of serious legal pursuit) demonstrate that.

The first, as highlighted by TorrentFreak is a profile about Evan Stone, the junior lawyer who has had a particularly hard time getting anyone in the legal community to take his cases seriously. This is the same Evan Stone who may be facing sanctions for his ethically dubious action of sending subpoenas to ISPs and getting names of account holders despite a court not allowing those subpoenas. Stone then responded with a ridiculously petulant filing to the court, and has since dropped most, if not all, of his cases -- though, he claims some indie film producers have signed up and he's gearing up to move forward. I would suggest that if any of those indie film producers read this, they might want to seek out a more competent lawyer who doesn't resort to insulting the court after he's called on a potentially serious ethics violation.

That said, it's not difficult to understand why he wanted to send out the subpoenas and get the names. Even though all of his cases have ended in failure, the article notes that approximately 40% of those who receive the threat letters settle... and Stone gets to keep 45% of the settlement money. That adds up. Even if you assume that the 40% settlement rate is inflated (it comes from Stone himself), he's making money on these questionable legal pursuits. All of his talk about "hating" file sharers in the article is for show. He's profiting from scaring people who don't want to go to court into paying up.

Similarly, Ars Technica has an article highlighting the voicemails left by another lawyer playing this game, John Steele, for the people he's sent legal threat letters to. And, of course, it becomes quite clear that the entire point of this strategy is to get paid. The voicemails repeatedly ask about the settlement or refer to the settlement and point out how it would be easier and cheaper to settle than to fight this in court. Amusingly, they leave out all of the difficulty Steele has had in getting a court to actually move forward with these lawsuits. Still, money is being made:

One can get a sense of how many settlements are being racked up by looking through Steele's various court dockets. Occasionally, he will voluntarily dismiss a batch of IP addresses from a suit without apparent reason; these appear to be people who have settled. In his Future Blue v. Does 1-300 lawsuit, for instance, Steele last week withdrew his claims against 15 IP addresses. If each one settled at $2,900 apiece, that's $43,500--not King Midas money, but hardly chump change, either.

Of course, this is also why these lawyers are getting more and more annoyed about the courts potentially cutting them off from such an easy cash generating venture (shaking down people is so much fun). In that profile on Stone, he claims that he may have figured out a way to get around having to actually go to court first:

He's hard at work on his latest strategy, one that'll help him fly a little below the radar on his pirate hunt: a subpoena provision in the Copyright Act that he's hoping will let him track down names and addresses without having to sue anyone first.

I imagine that would be news to the RIAA who already tried that and got shot down handily in court in the famous RIAA v. Verizon case. Of course, given his other mistakes, I guess it's no surprise that Stone apparently is unfamiliar with the case law on the matter.

Reader Comments

I had fun beating up on the "reporter" who did the puff piece on Stone, seems he only wanted to focus on the "upside" of someone truly ethically challenged. Maybe Stone being worthy a cover story as a champion of "right" was just to much to bear.

I also found something wrong with treating "Alex" as someone who was guilty on the word of a man who has violated the law in pursuit of profit.

Innocent until proven guilty still applies in this country doesn't it?

And I am sure it can't hurt Stones position to have a "reporter" calling and asking someone he has targeted for his side of the story, adding more pressure to someone Stone managed to out to his mother.

Stone tried the shakedown on the mother, who was the account holder, even though she had not done anything wrong.

So the claims that unmasking the people who were assigned an IP address are the responsible party sorta fall apart there don't they.

Then based on a claimed admission by the mother, and her failure to pay up he then filed suit against "Alex".

But on the upside it seems Stone is done with porn cases, considering his comments about his former clients in that industry he holds no good will towards them.

Of course that could be because they all dropped him as his tactics and missteps generated publicity about it being a scam and that reflected poorly on them.

That is almost as intelligent as Randazza filing suit against the guy with the unicorn and leprechaun giving him advice.

But then Randazza has been busy filing multiple suits in Ohio and a couple other states for low numbers of "Does" from very specific swarms, still not sure whats going on there. Waiting on details to get out of Pacer to dissect them.

I imagine that would be news to the RIAA who already tried that and got shot down handily in court in the famous RIAA v. Verizon case. Of course, given his other mistakes, I guess it's no surprise that Stone apparently is unfamiliar with the case law on the matter.

Re:

They will drop the cases before that happens.

Steele claims a proprietary system that cost him lots, Stone has a former cell phone middle manager who didn't have an investigators license while he was taking notes and screenshots. (Oh and some of his submissions matched the wrong clients and mac addresses to IPs.)

Given how quickly anyone with a technical background can raise questions about the accuracy of the system and show errors, they will never let it get to where they have to expose the systems.

Re: Don't break the law.

Settlement "offers" have nothing to do with breaking the law. They're issued in the same way mass mailing advertising is: you hope that x% of people who receive it shell out some cash.

It's like blackmail, only less targeted.

For instance, you receive a letter from the local PD claiming that they have clocked you doing anywhere from 5-15 mph over the speed limit a dozen times. Their offer is pay $1200 (100/per) or go to court and defend yourself against 12 separate speeding tickets. The insinuation is that it would be cheaper to settle than pay a separate fine ranging from $75-200 for each ticket if convicted, not to mention the time lost from work for 12 separate court appearances and potential legal fees, etc.

Without much more to go on than this, what would you do? Is there any way to prove conclusively that you were never speeding? Could you produce it in court? How about a court several hundred miles away from where you live? Do you have a verifiable record of what speed your vehicle was traveling during each alleged violation?

But you're a good driver. You don't break the law. See how far that gets you.

Re: Re: Re:

You don't even need an IP lawyer if you know where to look. If you look where some of Stones first cases came to light there was a response by the community. We tore apart the filing, the methods (because they told Ars how they specifically did it), and shed a great deal of light on it.

The methodology was flawed from the get go, and the idea that an IP address could and would lead you conclusively to the person who allegedly committed the infringement is silly. I always hoped they would target a convent of nuns with one of these cases, that would pretty much be the end of them. Right now my hopes are with Grandma in MN targeted by USCG... I think her case is strong... she don't own a computer.

Re: Re: Re:

Take away the litigation part of copyright suits? Seriously, since the DMCA has come into being, these types of stories have been pretty common. It's not about actual litigation, it's about a quick pay day by using the courts to sue people.

The most disgusting thing about Stone is how he says he can always sue someone else since "they're all pirates". That's not ethics, that's just greed manifest.

Re: Re: Re:

How about we separate noncommercial file sharing from commercial piracy.

Example -
LMH/CF sued a guy who was using eBay to sell DVD's he made of CF material.
They won just shy of a kajillion dollars.
This is an example of someone actually profiting from someones work, what the law was intended to stop.

Timmy really likes model A from LMH/CF and shares a file he got with his subscription to CF.
If we remove the hype of every download = $150,000 x the population of the world = how much we lost.
The loss to CF is x where x is how much of a subscription it takes to obtain the file directly from CF.
Now take into account that the variable Y is in play. Y is number of people who will see that clip, enjoy it, and then sign up so they can see more of Model A, and maybe more of that type.
Y is a variable the money being spent on advertising isn't reaching, that they now have.

Mind you CF is a horrible example right now given the negative press and silly TOS spectacle.

Most people file sharing are not doing so for money, this is the part everyone seems to get wrong. The advertising in most cases barely covers the bandwidth bills, they are not raking in trillions.

Many file sharing sites if asked, will block material for a time allowing the owner to get more from it on the front end. Once it is out there, then it becomes more advertising for that company which in turn creates more interest.

If content producers listened to the consumers and stopped silly things like 30 day windows, 4 versions, heavily laden DRM, special "rental only" versions with no features, and the like they would find that if you make it easy to obtain "legally" most people would do so. Or shall we call iTunes a fluke?

Maybe the trick is to take away the bludgeon of $150,000 and the most they can win is 2x the retail cost of the file. They are a "lost sale" after all and scoffing at the law, but $150,000 because you got tired of waiting for the studio to put out a disc with 5 minutes of unskippable ads and FBI warnings that are moot because you own the disc seems silly.

Re: Re: Re: Re:

"Take away the litigation part of copyright suits? Seriously, since the DMCA has come into being, these types of stories have been pretty common. It's not about actual litigation, it's about a quick pay day by using the courts to sue people."

Re: Re: Re: Re: Re:

Eventually - as has now happened with ACS law in the UK - the word will get out and people will stop settling. I think the death knell of ACS law sounded when the BBC "One Show" ( a very popular early evening magazine program in the UK) warned people about the scam. That more or less forced Crossely to take some cases to court to restore the credibility of his threats - and then it all fell apart.

Re: Re: Re:

And what about the people who DIDN'T break the law, but it's still cheaper for them to settle?

What do you suppose is the solution to that problem? Serious question.

Since it has been demonstrated repeatedly that these lawsuits never go anywhere, you just make a stonewall reply to their threat letters. If you're feeling aggressive you can countersue for your time and trouble in the UK this has been done successfully at least once.

Re: Re: Don't break the law.

In your "speeding" example the threat is coming from a government institution. It may still be a scam - but you have to take it seriously - they have the resources to pursue you and will do it to maintain credibility. The case of a smallish private organisation - without the formal backing of the state - is quite different!

Re: Re: Re: Re: Don't break the law.

The settlement letters pretty much set it up so you're required to prove a negative, which you can't. That's why they work.

Obviously, you could force the issue and take them to court, but that requires time and money that could easily add up to more than the settlement payment.

They're (the settlement shakedown artists) are banking on the fact that it's easier to pay then to face them down, even if only 3% (or whatever) are willing to send off a check with only a mass mailing on legal letterhead as "proof" of wrongdoing.

Side note: there's already a lot of "presumed guilty" going on even before it hits the court. See also: the earlier story about the guy busted because someone downloaded child pornography using his router. It's not always about them making a case for your guilt in court. Sometimes it's preemptive action that supposes guilt and requires you to produce evidence otherwise (prove the negative).

Just something I put together....

I was elsewhere discussing this sort of thing elsewhere and I had an aha moment.

The lawyers running these "settlement" (extortion) farms all want to claim that the IP address = The Evildoer.

Now add the case of the gentleman who had SWAT/ICE raid his home for kiddy porn based on just an IP address... only to discover he wasn't the evil pedocreep.

When you look at the facts in these 2 things, how can anyone think twice about accepting a "settlement" offer from someone who has no proof beyond an unverified allegation?

They are out to make a buck, like all of those people who email you looking for help to get millions of dollars out of a foreign land in exchange for your bank information or cashing a check, and need to be considered on the same level.

Re:

If you've been dismissed without prejudice, I believe that still means that they might file a new lawsuit against you for the same alleged infringement. I don't see how it would be illegal for them to offer to settle with you to prevent that from happening. My two cents.

Paid member yet threatened

I have been a paid member to Amateur Allure off and on for years and was last fall while I had alledgedly downloaded a file ilegally that I had access to legally. I emailed the owner of the website and asked him to look up my history with them and verify what I said was true and to call off his dogs. He responded within minutes stating he was not at liberty to handle anything with the case but passed on my email to John Steele. I recieved a call from John Steele the very next day and was told that my history with Amateur Allure was irrelevent and I still needed to pay in one week or risk being taken to federal court. This is one huge extortion and the person who hired John Steele should be named and drug through the mud the same as John Steele. I plan to get a lawyer and openly fight as needed if I am taken further. Anybody who has any other advice on how to fight these low lifes is welcome to comment.

Re: Paid member yet threatened

I am also in the same boat as you, I just received the letter in the mail asking for $2900 to settle. I can't afford to pay this.
Do I just wait it out, I really don't want to hire a lawyer but what is the worst case scenario here? This is ridicious.

Re: Re: Paid member yet threatened

I spoke to a lawyer and was given my options, he is very confident that if I am taken to court he can succesfully handle this case. I can't suggest what you should do but your first consult with a lawyer is free. Just keep reading up on what the status is of the ongoing cases, the PACER website is direct info from the chicago courts. He has so many cases that if he were to litigate each one in the proper jurisdiction he will potentially spend more than he can make unless he can be certain to get the win. And not to mention after all the music lawsuits there is public record of how most cases were capped at $3000 unless there were huges abuses so even if he is able to win the chances of paying more than he is asking for as a settlement is slim to none and I will bet is where he got his figures from for the settlement.